A newer community centre was added in 2002, but the original mosque is largely unchanged in layout from when it first opened.
The Albanian Moslem Society Shepparton Inc which manages the mosque has received a$375,000 grant from the Victorian Government's Multicultural Infrastructure Fund.
Society President Reg Qemal said the remainder of the money would be raised from the community.
This current committee and past committees have wanted to do the renovation but obviously funding has always been a challenge,” he said.
“We (have) up to 300 worshippers but there is only so much money you can ask for from the community so the grant fitted what we wanted to do, without the grant we would still have the project on the table but it would take us much longer to achieve.”
While the mosque was the first established in Victoria, Albanian migrants first began arriving in the district in the 1920s. Prayers were held outdoors, and then for more than 30 years in rented buildings before the permanent place of worship was built.
There was no motivation to build one earlier as most of the men were participating in a traditional practice called kurbet, where they would travel overseas, work for a few years, save money, and then return to the village.
That changed with the rise of communism in Albania after World War II and the community in Shepparton was strengthened by a wave of post-war refugees.
Mr Qemal said the mosque had an important religious function but was also a place for community events.
“Although the mosque is historically linked to the Albanian community we welcome worshippers from all nationalities and cultural backgrounds and the multicultural nature of the mosque along with its spirit of unity and harmony reflects the wider community and its successful history of integration,” Mr Qemal said.
Work on the redevelopment is expected to start in August and be completed by the end of the year.